BHP Billiton has begun the divestment of its non-core assets with the sale of nickel and copper properties to Perth mining junior Cassini.
Cassini Resources has announced that it is buying up a slew of BHP Billiton's nickel and copper assets situated on the eastern fringe of Western Australia, close to the border with the Northern Territory and South Australia.
The prospecting area is located in the West Musgrave region, and covers a 1000 square kilometre area harbouring as much as 1.5 million tons of nickel and 1.56 million tons of copper.
Cassini managing director Richard Bevan said the company will pay BHP $250,000 in cash for the prospect, after which point it will pay the mining giant a further $10 million 12 months following the commencement of production at the sites, as well as a 2 per cent royalty on output to be paid on a quarterly basis.
Cassini is a Perth-headquartered mining exploration company which was listed on the ASX in January 2012, and already has other deposits in West Musgrave as well as gold prospects in Nevada.
The company said the project served as a natural compliment to its existing operations, given its ownership of other deposits in the region.
"Cassini intends to apply a new, innovative approach to the development of these assets with the goal of becoming a significant base metal producer in a relatively short timeframe," the company said.
The sale of the assets arrives just as reports emerge that BHP is mulling the large-scale divestment of non-core assets and businesses, in order to renew the company's focus on mainstay metal and fossil fuel commodities.
“We believe that a portfolio focused on our major iron ore, copper, coal and petroleum assets would retain the benefits of diversification, generate stronger growth in free cash flow and a superior return on investment,” BHP said. ”By increasing our focus on these four pillars, with potash as a potential fifth, we will be able to more quickly improve the productivity and performance of our largest businesses.”
Offloading the nickel and copper assets is also in line with BHP's decision to withdraw from deposits which it considers to be marginal, and are incapable of producing 15,000 tons of minerals annually over a 15 year period.